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China supply chain woes threatens short term outlook, warns Dixon Technologies

business | Dec 21, 2022 12:54 PM IST

China supply chain woes threatens short-term outlook, warns Dixon Technologies

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KRChoksey's Deven Choksey believes that a correction in the stock of Dixon would be a welcome opportunity to add the stock to the portfolio.

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Supply chain issues emanating from China due to the recent spike in Covid cases may hurt Dixon Technologies' guidance in the short term, Managing Director Atul Lall told CNBC-TV18 in an interview.
However, he choses to look at the positive emerging from this situation.
“In the short-term there may be some risk on account of supply chain challenges, but on an overall basis, it gives us a significant opportunity because the China plus one thesis gets activated even more,” Lall told CNBC-TV18.
As a result, the company now expects the mobile business to earn revenue of Rs 4,000 crore to Rs 4,500 crore for the current financial year, lower than the Rs 4,500 crore to Rs 5,000 crore guided earlier.
Lall further added that the company has not experienced any delivery issues until now but they are closely monitoring the situation in China.
On the demand front, Lall said that while demand for mobiles, LED TV has been slow globally, washing machines, telecom devices and lighting products continue to see a good response.
Deven Choksey of KRChoksey sees any meaningful correction in Dixon's stock price to be an entry point, citing that the larger picture remains intact despite some short-term pressure. "So correction in the price would be a welcome opportunity to add into the portfolio, this particular company,” he said.
The government has announced incentives worth over Rs 400 crore for mobile manufacturing to Foxconn India and to Padget Electronics, a Dixon subsidiary. From this sum, Padget will receive Rs 58 crore as incentive for mobile manufacturing for the January-March quarter.
Shares of Dixon Technologies are trading 1.3 percent lower at Rs 4,000.
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